The Sound of Economics

In this episode of the Director's cut, Bruegel's director Guntram Wolff hosts a conversation with Danièle Nouy, the first chair of the European Single Supervisory Mechanism. On the eve of the end of her mandate she traces the legacy of her five years and the prospects for the future of banking supervision in Europe.

In November 2008, the first G20 summit at the leaders' level took place amid the global financial crisis. The admittedly ambitious undertaking has since played its role in stabilising the global economy throughout the aftershocks of the crash. Today, the global order looks much different to the one in which the G20 found itself 10 years ago. How has the institution evolved and is it still equipped to create a supportive political environment for strong national and global actions? In this episode of Bruegel's Deep Focus series on 'The Sound of Economics', Suman Bery reviews the G20's performance over the past decade to identify the challenges for the future. After the initial success, he identifies a sense of complacency that has seemingly crept into the global forum. Moreover, the emerging and developing economy members have remained observably passive, which may reflect their discomfort at their perceived systemic importance despite lower levels of income. A further challenge for the G20 arises from Donald Trump assuming the US presidency in 2016, and the following tendency to drift away from multilateralism in favour of bilateral trade. The upcoming summit in Buenos Aires may be revealing in terms of just how much the G20 depends on American leadership. Another question remains about what potential the EU has as a future leader within the institution. One thing is certain: to champion a comprehensive approach, the G20 must conceive a set of rules that closer reflects the changing world. For further reading we suggest not only the Policy Contribution written by Suman Bery – 'The G20 turns ten: what’s past is prologue' – but also the blog post of Jim O'Neill and Alessio Terzi, outlining a proposal for a reformation of the G7.

This episode of the Director’s Cut features a conversation between Bruegel’s director, Guntram Wolff and Maha Yahya, the director of the Carnegie Middle East Center, where her research focuses on citizenship, pluralism, and social justice in the aftermath of the Arab uprisings. Yahya is the author of numerous publications, including most recently “Unheard Voices: What Syrian Refugees Need to Return Home” (April 2018); “The Summer of Our Discontent: Sects and Citizens in Lebanon and Iraq” (June 2017); and “Refugees and the Making of an Arab Regional Disorder” (November 2015).  For further reading, we recommend our blueprint "People on the move: migration and mobility in the European Union", written by Uuriintuya Batsaikhan, Zsolt Darvas and Inês Goncalves Raposo. Zolt Darvas also contributed to the debate on migration and refugees in Europe with two blogs on similar topics: Beyond border control, migrant integration policies must be revived and The challenge of fostering financial inclusion of refugees.

Think-tanks play a critical role in developing and promoting policy solutions, particularly in times of extreme disruption and change. However, these organisations now operate in information-rich societies where facts, evidence and credible research are often ignored – and where disinformation can gain a footing. In this edition of the Bruegel Backstage podcast series on ‘The Sound of Economics’, Bruegel secretary general Matt Dann welcomes senior thought leaders from research centres around the world, to discuss a range of strategies and best practices for transforming public policy and institutions in an era of digital and political disruptions as well as increased social and economic turbulence. Speakers Matt Dann, secretary general at Bruegel James McGann, director of the Think Tanks and Civil Societies Program at the Lauder Institute, University of Pennsylvania Milena Lazarević, programme director and co-founder of the European Policy Centre in Belgrade, Serbia Edward Kofi Anan Brown, senior director for research and policy engagements at the African Center for Economic Transformation in Ghana Credits Produced by Giuseppe Porcaro James McGann, Milena Lazarević and Edward Kofi Anan Brown participated in the Global Think Tank Summit 2018, hosted by Bruegel in Brussels.

The final act of the Brexit negotiations is upon us, with many questions still seemingly unresolved and the future relationship between the EU and the UK yet uncertain. The EU remains unyielding on compromising the integrity of the single market, with the UK struggling to propose an agreement suitable both for the EU as well as its own nuanced internal political situation. With the numbers delicately balanced in the UK’s House of Commons, whose MPs have to ratify the final deal, the subtlest shifts in positions and proposals have the potential to constitute serious stumbling blocks on the road to an agreement. Joining Bruegel’s Maria Demertzis for this Director’s Cut of ‘The Sound of Economics’ is Robin Niblett, director of the Chatham House institute in London. Together they run through what has already been agreed, what sticking points remain to be got past, and how the two sides might yet reach a deal that suits them both. For further reading, we recommend our blog post, written by Maria Demertzis and André Sapir, outlining the basic options for the future relationship of the EU and the UK, how they might be negotiated upon, and which would suit each side the best.

Bruegel senior fellow Nicolas Véron joins Sean Gibson to delve into the recent Policy Contribution on how to better the European Union anti-money laundering (AML) regime, a paper he has co-written with Joshua Kirschenbaum. The study offers a response to the evident flaws of the present system, exemplified by a series of banking scandals in multiple European Union countries, and amplified by changing geopolitics. The shortcomings of the current legal framework are identified by the authors as systemic in nature – the combination of an enforceable single market and national supervision of banks fails to meet the AML objectives. In their analysis, the authors propose a new European AML authority that would work on the basis of deep relationships with national authorities such as financial intelligence units and law enforcement agencies. For further reading, you might consider a blog post by Isabel Schnabel and Nicolas Véron discussing the need to "complete the banking union" by breaking the bank-sovereign vicious circle.

Bruegel senior fellow Zsolt Darvas welcomes Sayuri Shirai, professor at Keio University, visiting scholar at the Asian Development Bank Institute and former Member of the Policy Board of the Bank of Japan (BOJ), for a discussion of the Japanese monetary policy outlook. Japan is often portrayed in the economic circles as a country facing decades of loss, as it has long been experiencing slow economic growth and sluggish underlying inflation, despite numerous attempts at boosting it. The ambitious plan designed to do just that is known as ‘Abenomics’, a macroeconomic package advocated by Japan’s Prime Minister Shinzō Abe, based upon the ‘three arrows’ of monetary easing, fiscal stimulus and structural reforms. To evaluate the outcomes of the Abe’s policies and explore the challenges facing Japanese economy, Bruegel senior fellow Zsolt Darvas welcomes Sayuri Shirai, professor at Keio University, visiting scholar at the Asian Development bank institute and former Member of the Policy Board of the Bank of Japan. The discussion touches upon the reasons why target inflation is so hard to achieve, including the issue of stagnant wages and low labour productivity, especially in the context of Japan’s aging society. It also reflects on the Bank of Japan’s monetary easing normalisation, and whether it is feasible for it to tamper its massive government bond purchases. For further reading, you might consider a blog post by Akio Egawa on the third arrow of Abenomics – a growth strategy. We can also recommend our recent round up of economists’ opinions on the past years of Abe’s policies.

Bruegel director Guntram Wolff is joined by Tharman Shanmugaratnam, deputy prime minister of Singapore and chair of the G20 Eminent Persons Group, and Jean Pisani-Ferry, mercator senior fellow at Bruegel, for a conversation about the growth and stability challenges facing the global financial system, and how the system can be better equipped to deal with the significant and novel problems of the future. In this Director’s Cut of ‘The Sound of Economics’ Guntram Wolff is joined by Bruegel’s mercator senior fellow Jean Pisani-Ferry, and by Tharman Shanmugaratnam, deputy prime minister of Singapore and chair of the G20 Eminent Persons Group. A report from the Eminent Persons Group looks into how the global financial system can adapt to meet the sizeable challenges the future will pose, with particular reference to growth and financial stability. Small episodes of growth scarcity accumulate to make for a significant reduction worldwide, and the current model is not going to achieve the necessary uptick in growth in the next decade. Meanwhile, financial stability remains elusive, despite the positive changes made – particularly in the banking sector – since the most recent crisis. But the report from the G20 Eminent Persons Group is not without hope, and in fact sees a practical way forward by which the gaps in the current system can be plugged before new foundations are laid for the future. For further reading, we recommend Jean Pisani-Ferry’s Bruegel Policy Contribution on the question of whether we should give up on global governance in such turbulent times.

Amid the Asia-Europe Economic Forum on the fringes of the 12th ASEM Summit, Bruegel senior fellow hosts a conversation on developing global trade relations, with guests Moonsung Kang, professor as Korea University, and Michael G. Plummer, director at SAIS Europe – Johns Hopkins University, for an episode of the Bruegel Backstage series on ‘The Sound of Economics’. With Bruegel hosting the two-day Asia-Europe Economic Forum in the same week as the Asia-Europe Meeting takes place in Brussels, André Sapir takes the opportunity to talk about the quickening changes to the global trade landscape in conversation with Moonsung Kang, professor as Korea University, and Michael G. Plummer, director at SAIS Europe – Johns Hopkins University.  Led by President Donald Trump, the US has begun to challenge the multilateral trade system. Meanwhile, Europe has been busy securing free trade agreements – most recently with Japan, previously with Canada and others. With the US appearing to withdraw, and abdicate its leading role in the global trading system, Asia’s moves to improve relations with Europe make sense; the EU seems to have better appreciated the shift of the gravitational centre of world trade towards Asia. The question remains how closely Asia and the EU will agree to cooperate in the years to come, and whether the US political narrative will develop in a way that leads them back towards free trade, or even further down the road of bilateral agreements.  If you are interested in reading more on this topic, we can recommend the research paper on the EU-Japan agreement that Bruegel has submitted to the European Parliament, by André Sapir, Sonali Chowdhry and Alessio Terzi. Consider also the Bruegel Backstage podcast episode on the developing EU-China relationship in the face of rising global trade tensions.

In this episode of Deep Focus, Bruegel research fellow Simone Tagliapeitra explains how the nature of cross-Mediterranean energy relations needs to change, not only in line with new climate-change targets but also to meet the burgeoning energy demand outside Europe. Oil and gas dominated Euro-Mediterranean energy relations in the 20th century, but with the turn of the 21st century came a new focus on renewable sources. The new ventures were less successful than those of old, and both institutional and commercial plans failed to achieve the same level of fruitful cooperation. With electricity demand sky-rocketing in the Middle East, future efforts must differ from those of the past in providing much more supply for the countries outside Europe. The EU can play a key role in ensuring that both they and the countries on the southern side of the Mediterranean Sea benefit from such a spike in energy demand, with a strategy in-keeping with agreements already reached on cutting greenhouse gas emissions. In this episode of Bruegel’s Deep Focus series, Simone Tagliapietra explains how the regulatory and financial constraints on renewable energy projects can be overcome. European institutions have the capability to back the sizeable upfront investment in renewables that will propel such projects towards their long-term pay-offs. But funding must be conditional on reform that promotes private investment and removes archaic bias towards fossil fuels. The research discussed in this episode is available in full in the Bruegel Policy Brief, ‘The Euro-Mediterranean energy relationship: a fresh perspective’, by Simone Tagliapietra. This scholar has also collaborated with Bruegel senior fellow Georg Zachmann on a study of Europe’s failure to clean up its transport sector, which we recommend as further reading.